UK - FTSE100 companies face an aggregate FRS17 deficit of over £25bn, new research from actuary Lane Clark & Peacock shows.
It identifies the pension funds of Allied Domecq, the Daily Mail & General Trust, Rolls Royce and Prudential as posing the biggest risks to their sponsoring companies.
All five schemes are large in relation to their sponsoring companies, but hold a 60% minimum equity weighting placing in a high-risk bracket, according to LCP’s ninth annual report.
The survey – Accounting for Pensions – notes that Allied Domecq’s pension funds in particular are worth nearly five times as much as its sponsoring employer.
LCP partner Alex Waite said: “The inherent volatility of the new accounting standard for companies whose pension schemes invest in equities means that schemes may regularly lurch from large FRS17 surplus to significant deficit.”
Separate research by investment bank UBS Warburg published this week – entitled FRS17: One Year On – pointed to the pension liabilities of Rolls-Royce, BT, Royal & Sun Alliance and GKN as posing the greatest risk to their sponsoring companies.
It identified the Rolls Royce Pension Scheme as containing an estimated £1.1bn shortfall – 50% of the company’s market capitalisation as at July 29.
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